Rehab Center Guilty Of Insurance Fraud

Prosecutors on Tuesday announced a deal with a bankrupt Fort Lauderdale-based substance abuse program accused of bilking federal health insurers of more than $7.7 million.

National Recovery Institutes Group Inc. ran clinics in Fort Lauderdale, Boca Raton and New York that provided education and counseling to adults recovering from alcohol and drug dependency.

But the clinics were criticized by former employees and social service agencies for fraudulently billing government insurers and using bribes to recruit clients. A whistleblower lawsuit filed in 1996 by former employee Joelee Caplan also accused the company of billing for services that were not medically necessary.

"They would bill Medicare $135 an hour and then take the patients bowling or to see a movie," said Assistant U.S. Attorney Laurie Rucoba, who represents the government in the U.S. False Claims Act civil litigation that began with Caplan's complaint.

In April 1997, one month after federal and state investigators raided National Recovery offices and seized stacks of documents, the company filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

The agreement announced Tuesday lets the U.S. government keep the $142,288 it withheld once the fraud, dating back to 1993, was uncovered, Rucoba said. The money came from Medicare, Medicaid and Tricare programs.

For its share of the rest, the government must stand in line in bankruptcy court with the company's other unsecured creditors, Rucoba said.

"The trustee set aside a very small pot of money, $175,000, for the unsecured creditors, and we'll receive a pro rata share," she said.

The government must share whatever it gets with Caplan, the whistleblower. Under federal law, she is entitled to 20 percent of the recovery.

Officials of the company's defunct Florida operations could not be reached for comment.

In 1997, Robert E. Mann, National Recovery's senior vice president and general counsel, characterized the raid and document seizure as routine and denied any wrongdoing.

A similar denial appears in the agreement that settled the False Claims Act lawsuit, Rucoba said.

The law enforcement operation that shut down National Recovery was a joint federal and state effort. The investigation was conducted by the Office of Inspector General, Department of Defense, and the Florida Attorney General's Medicaid Fraud Control Unit.

On Monday, U.S. Sen. Bob Graham announced a stepped-up effort to join forces with the state in combating health care fraud. The federal government has earmarked $3 million to target fraud in Florida.

The money will pay for a strike force to keep state, local and federal agencies from duplicating each other's work.

Noreen Marcus can be reached at nmarcus@sun-sentinel.com or 954-356-4519.